Stuart Corner
Friday, 02 March 2007 06:15
IT Policy -
Regulation
Page 1 of 2
The ACCC has revoked a competition notice imposed on Telstra in April 2006 over its wholesale line rental pricing, freeing Telstra from the threat of fines that could have run into hundreds of millions of dollars.
The ACCC imposed the notice after Telstra, in December 2005, increased its wholesale line rental price without making any similar increases in its retail products. The price increase resulted in Telstra's retail prices for the line rental component for the majority of its fixed voice products being below Telstra's wholesale price for line rental.
The ACCC argued that Telstra had taken advantage of its market power in a way that was detrimental to competition in retail markets for telecommunications services - in breach of the Trade Practices Act.
The ACCC was not able to order Telstra to cease the offending conduct, but the issue of the notice enabled it, and other parties, to take Telstra to court and if the conduct set out in the notice is proven to have impeded competition, the court can impose fines of up to $3 million per day for a year following issue of the notice.
However the ACCC would face a considerable challenge, and cost in mounting a successful court action.
Telstra detailed the risk of fines in its T3 prospectus, but expressed the view that a court would not impose the maximum penalty and also indicated that it would challenge the validity of the notice. "We have...claimed that the competition notice should be set aside for uncertainty and that the ACCC did not accord us procedural fairness by failing to properly consult with us prior to the issue of the notice. The ACCC argues that it has complied with all of its duties of procedural fairness and natural justice."
